9. Income taxes

The Company is subject to federal and state income taxes in the United States.

The Company’s effective income tax rate differed from the statutory federal income tax rate of 34.0% for the three months ended March 31, 2016 and 2015. For the three months ended March 31, 2016, this difference is primarily due to state income taxes and nondeductible expenses. For the three months ended March 31, 2015, the difference was primarily due to changes in the valuation allowance applied against the Company’s deferred tax assets. A reconciliation of such differences is shown as follows:

	Three Months Ended March 31,
(In thousands)	2016					2015
Tax on continuing operating loss before income taxes	$	(3,500	)	34.0	%	$	(531	)	34.0	%
Non-deductible loss on exchange of warrants		92		-0.9	%		-		0.0	%
Other permanent differences		68		-0.7	%		-		0.0	%
Effect of state taxes (net of federal tax benefit)		(389	)	3.8	%		-		0.0	%
Non-deductible share-based compensation		207		-2.0	%		-		0.0	%
Valuation allowance		-		0.0	%		531		-34.0	%
Benefit related to income taxes	$	(3,522	)	34.2	%	$	-		0.0	%

Deferred income taxes should be reduced by a valuation allowance if it is more likely that not that some portion or all of the deferred tax assets will not be realized. On a periodic basis, management evaluates and determines the amount of valuation allowance required and adjusts such valuation allowance accordingly. Management believes, based on evaluation of all positive and negative evidence, that the deferred tax assets recorded as of March 31, 2016 will be fully realized and therefore has not recorded a valuation allowance.

In accordance with the provisions of ASC 740 -10, the Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. As of March 31, 2016 and December 31, 2015, the Company has no liabilities for uncertain tax positions. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. All of the Company’s income tax filings since inception remain open for tax examinations.